American Anarchism

This talk was delivered
at the library of the Ludwig von Mises Institute, November 20,
2000, and was posted on
Mises.org December 28, 2000

by Wendy McElroy

This afternoon I want to take a very
basic look at one of the traditions that underlies modern
libertarianism--namely, 19th century individualist anarchism in
America.

Before doing so, however, I want to define what
I mean by modern libertarianism. Namely, the body of political
thought that emerged from and continues to develop through the
synthesis of

the best theory from four schools of
thought. The synthesis was accomplished when Murray Rothbard
took the radical anti-statism of the individualist anarchists
and wed it with Austrian economics, the foreign policy of the
Old Right (isolationism) and the natural law tradition.

Of these threads that were woven together, the least
appreciated or understood is individualist anarchism. And I
think one reason for this "oversight" is that, at first glance,
individualist anarchism doesn't seem to share a key
characteristic common to the others: that is, it doesn't seem to
argue for the free market.

If there is any validity to a
distinction you some-times hear drawn between civil liberties
and economic liberties--and I don't believe there is
validity--then individualist anarchism seems to fall into the
category of civil liberties, which sometimes becomes an
afterthought attached to free market analysis. Individualist
anarchism doesn't seem to be a good fit with the other building
blocks of libertarianism for the simple reason that its
proponents -- like most 19th century radicals -- embraced a
labor theory of value and rejected capitalism.

By this, I
don't mean merely that they stood against State capitalism --
the alliance between government and business. They rejected
actual capitalism, the making of profit through capital in
practices such as charging interest on loans. And, yet, one of
the points I want to drive home today is that individualist
anarchism was profoundly free market and that its
anti-capitalism is the not the ideological barrier it is usually
considered to be.

Before moving onto that point, however,
I want to expand on just one reason why I believe it is very
important that modern libertarianism doesn't stumble over the
anti-capitalism of figures such as Lysander Spooner and Benjamin
Tucker and, thus, lose the value they have to offer.

My
view of history -- the analytical approach I use in order to
make sense of events -- is ideological. Murray Rothbard viewed
history as an ongoing struggle between liberty and power,
between what Rand would have termed 'the individual' and 'the
collective.' These days it is popular to state that people are
not motivated by ideology but by utilitarian concerns. (For
example, they don't vote on the grounds of right and wrong but
on the grounds of self-interest.)

I've always been
baffled by this argument because merely looking at the world
around us would seem to refute it. Two of the most powerful
forces that have shaped the reality/the history of everyone in
this room are profoundly ideological -- Christianity and
Marxism. From these two examples alone, it seems impossible to
deny the power of ideology as a force in human history.

But in viewing history as a struggle between ideologies,
a lamentable thing has become clear to me: the left is better at
claiming the past than libertarians are. Much better. If you
look through standard textbooks or do a brute numerical count on
historical treatments or biographies, you reach the inescapable
conclusion that socialism was *the* radical force speaking for
working people against the alliance of business and government
in 19th century America. And socialism has reaped great benefits
from this image--"radical prestige" and credibility being only
two of them.

The problem here is that the image is false.
19th century libertarians have as much claim to be champions of
the working people--and, in many cases, a far better claim--than
socialists do. Consider only one figure...Moses Harman, one of
my favorite figures in libertarian history. It is delivered
wisdom that the socialistic Margaret Sanger was *the* heroine
responsible for opening up birth control for women in America.
(And birth control in the 19th century was considered to be a
"working class" issue for a number of reasons.) Yet Sanger
herself acknowledged that her work would not have been possible
without the decades of groundwork laid by Moses Harman. The
socialist anarchist Emma Goldman -- often credited with being a
precursor to Sanger on birth control -- also paid homage to
Harman.

Moreover, his reputation was not confined to
America. In 1907, when the playwright George Bernard Shaw was
questioned about why he never visited America, he replied...and
was quoted in the periodical "London Opinion" as saying, "The
reason I do not go to America is that I am afraid of being
arrested...and imprisoned like Mr. Moses Harman." Shaw went on
to explain that the harsh prison sentence imposed upon a man of
Harman's "advanced age" amounted to a death sentence. A death
sentence imposed for expressing the same views that Shaw had
aired in his play "Man and Superman."

The imprisonment to
which Shaw referred was part of an ongoing government
persecution of Harman under the Comstock obscenity laws. The
persecution lasted for decades with Harman's last imprisonment
occurring when he was 75 years old. (He served hard time,
breaking rocks at Joliet.) Among the "crimes" for which he was
imprisoned --over and over again -- was defending women's
reproductive freedom on explicitly libertarian grounds: namely,
that women (and men) were self-owners with a moral and natural
right to control their own persons and property. In short, he
was an explicit libertarian.

If you contrast the treatment
of Sanger as an historical figure with that of Harman, you'll
get a sense of why I believe that socialists are much better at
mining the richness of history to their advantage. There are
dozens of books about Sanger, her own work is still available,
New York University has what is called The Margaret Sanger
Papers Project, she is in Halls of Fame, buildings are named
after her, she herself was named by Time Magazine as one of the
top 100 people of the century.

Meanwhile, there is not so
much as a single biography of Moses Harman. As a result, it is
the left--and not libertarians--who have acquired the invaluable
cache of being the ideology that stands for the freedom of the
average man, the working man, then and now. I think the opposite
is true. I think one of the saddest aspects of modern
libertarianism is that it has surrendered or ignored its own
history and thus surrendered its rightful claim to being the
true ideology of the working class. A claim that would go a long
way toward dispelling an accusation commonly hurled at
libertarianism: namely, it represents only the interests of
business. There is no way to look at 19th century individualist
anarchism and sustain that accusation.

What is the 19th
century tradition known as individualist anarchism? The
fundamental principle upon which it is based is what the
abolitionist--the radical anti-slavery advocate--William Lloyd
Garrison called self-ownership. (This was circa 1830)
Self-ownership refers to the moral jurisdiction that every human
being, simply by being human, has over his or her own body.

Garrison argued that all secondary human
characteristics--such as race--were irrelevant to the rights and
duties that accrued to every human being as a result of the
primary characteristic of a shared humanity. I begin with
Garrison because when you mention libertarianism around the
1830s, he is the figure most people have heard of and to whom
individualist anarchism is often traced. But I think a far more
appropriate fountainhead for the tradition is Josiah Warren whom
the historian James J. Martin believes was the first person to
adopt the label anarchist.

Josiah Warren began his
radical career as a follower of the socialist and communitarian
Robert Owen. (Warren was one of the original participants in the
famous New Harmony community that began in 1826) and he saw
first-hand what was wrong with the organizing principle of
socialist communities. After decades and decades of discussion
by utopian planners -- both in England and America, New Harmony
put their theories to the test. Warren saw how quickly a
practical test made their schemes deteriorate into folly. It
took less than a year and a half for New Harmony to dissolve.
Warren blamed the community's failure on its denial of personal
property rights, on the demand for communal property that
stifled all individual initiative.

But the problems he
perceived with community property went far beyond economic
motivation. Warren wrote in his publication Periodical Letter,
"it seemed that the difference of opinion, tastes and purposes
increased just in proportion to the demand for conformity...It
appeared that it was nature's own inherent law of diversity that
had conquered us...our 'united interests' were directly at war
with the individualities of persons and circumstances and the
instinct of self-preservation..."

From Josiah Warren's
disillusionment with collectivism--from his conviction that
social harmony required radical individualism--the essential
groundwork for an individualist anarchist society emerged. First
and foremost, it was founded on a concept captured by the phrase
Sovereignty of the Individual. By this, Warren meant much the
same thing as Garrison did by the term self-ownership. In his
work "Practical Details," Warren explained his meaning, "Society
must be so converted as to preserve the SOVEREIGNTY OF EVERY
INDIVIDUAL inviolate. That it must avoid all combinations and
connections of persons and interests, and all other arrangements
which will not leave every individual at all times at liberty to
dispose of his or her person, and time, and property in any
manner in which his or her feelings or judgment may dictate,
WITHOUT INVOLVING THE PERSONS OR INTERESTS OF OTHERS."

But Warren contributed more than merely a rephrased
statement of self-ownership. For example--and as just one
example--Warren sketched out a fundamental approach to society
that could be termed "methodological individualism" -- a term
usually associated with Ludwig Von Mises. In "Human Action",
Mises described what he meant by the term. "First we must
realize that all actions are performed by individuals... If we
scrutinize the meaning of the various actions performed by
individuals we must necessarily learn everything about the
actions of the collective whole. For a social collective has no
existence and reality outside of the individual members'
actions."

Warren's approach to society echoed upward
through decades so that you find his proteges, like Benjamin
Tucker, in "Liberty" in 1888 dismissing Henry George's theory of
community land owner-ship with words that sound Misesian, "That
there is an entity known as the community which is the rightful
owner of all land, Anarchists deny. I...maintain that 'the
community' is a non-entity, that it has no existence, and is
simply a combination of individuals having no prerogatives
beyond those of the individuals themselves."

As well as
developing a version of methodological individualism, Warren
infused individualist anarchism with a passion for the
practical. If one passion ruled Warren's political life, it was
to test social theories by translating them into reality.
Remember: he had seen elaborate plans that were wonderful on
paper turn into nightmares when translated into reality. Warren
needed to know if his theories worked. This passion for the
practical was adopted by the generation that followed. To use
Tucker again, he once commented, "Reform communities will...be
recruited from the salt of the earth, and then their successes
will not be taken as conclusive, because it will be said that
their principles are applicable only among men and women
well-night perfect...It has no interest for me.... I care
nothing for any reform that cannot be effected right here in
Boston among the every day people whom I meet in the streets."

I should remind you here--or, perhaps, tell you for the
first time--that this quote came at the same moment as Edward
Bellamy's hugely successful Utopian novel "Looking Backward."
The novel captured the popular vision with which radicals viewed
the future: if only their ideology could prevail, it would bring
the millennium. Man's nature itself would be transformed by
social factors, lambs would lie down with lions. This was a
constant theme of late 19th century radicalism...socialists,
women suffragists, temperance zealots, pietists,...everyone
claimed that a bright and brave New World would miraculously
alter the face of the earth. This was particularly prevalent in
19th century socialism, which formed the seed of the New Soviet
Man championed by the Bolsheviks when they swept 20th century
Russia.

Meanwhile you have this remarkable statement
coming out of individualist anarchism: 1) that individuals
shouldn't conform to society because -- for one thing -- society
doesn't exist. Only individuals do; 2) that in exploring how
individuals could peacefully work in combination, all theories
must withstand the test of reality; and, 3) that the goal was
not utopia, but practical justice. Consider the words of Victor
Yarros who, for a period, co-edited Liberty. He wrote, "The
anarchists...work not for a perfect social state, but for a
perfect political system. A perfect social state is...totally
free from sin or crime or folly; a perfect political system is
merely a system in which justice is observed, in which nothing
is punished but crime and nobody coerced but the invader."

The key to achieving this perfect political system lay in
establishing institutions that promoted justice. Which brings me
to the subject of "institutional analysis," the analysis of how
institutions--such as the State, the family, the free
market--function. What is their purpose, their rules, their
actual impact? And here you have the next contribution of
individualist anarchism -- an incredibly sophisticated and
extensive institutional analysis that attempted to answer two
questions. 1) which institutions impede justice, and how? 2)
which institutions promote justice, and how?It will surprise no
one that their answer to the first question is "The State." The
State is the institution that blocks justice. And it does so
basically through the threat and use of force or by persuading
the people of its legitimacy, persuading them that it has a
right to interfere in their lives.

I'm not going to spend
any time on the individualist anarchism analysis of the State as
an institution because--to the extent that people here are
familiar with the tradition--the familiarity is on this point.
To the extent that people have read one book in this area, it is
probably Spooner's "No Treason."

I'm going focus instead
on the second question, 'which institutions promote justice, and
how?' To this question, individualist anarchists made an
astonishing response. They claimed that the institution
necessary to secure justice was already present in the
institution of the free market. Radicals to every side of them
were saying that something new under the sun was required -- the
sort of institution or societal arrangement that no one had ever
seen before. For example, mankind needed the anarcho-syndicalist
vision of industrial relations. We needed a Brave New World.

In this milieu, individualist anarchists claimed instead
"no, you don't need an entirely new blueprint. What you need is
to get rid of the State and to allow the free market (that
already exists) to function. And the mechanism through which it
would function was "the contract." Indeed, they believed so
strongly in the power of contract that they called their ideal
society "society by contract." And they immediately started to
plan out in very concrete detail how the free contract." The
free market could satisfy not only economic goals but social
ones, such as justice. For example, they provided the best
discussion I've ever seen of how a private court system could
arbitrate conflicts. And the discussion incorporated a large
degree of economic analysis, and analysis of efficiency rather
than merely appeals to common law or morality. For example, in
the sub-issue of "trial by jury," the discussion started with
the right of a man to try his own case and proceeded directly
into an efficiency and cost analysis of relative methods of
adjudication.

Nor did the individualist anarchists
confine themselves to discussion, to theory. They wanted to test
their theories out in the practical world. For instance, they
established private unemployment insurance co-operatives: these
were agencies into which all members would put "x" percentage of
their weekly earnings and from which members who became
unemployed could draw "x" number of dollars until they regained
employment. So, having sketched the political contributions of
individualist anarchism -- especially in their locating social
justice in the free market and the use of contract -- I want to
move onto the reason their contributions have been largely
ignored. Namely, they championed the labor theory of value.

Earlier, I mentioned that the main theme underlying
individualist anarchism was Sovereignty of the Individual, to
use Josiah Warren's term. Warren used another term to describe
the second theme/principle of individualist anarchism, which he
thought derived directly from sovereignty of the individual:
namely, "Cost is the Limit of Price." And this is where the
labor theory of value begins to play a prominent role in
individualist anarchism. To give you a sense of the specific
approach to the labor theory of value adopted by Warren, I want
to describe an experiment he conducted to test his solution to
what was called "the money monopoly." That is, the State's
monopoly on the issuance of currency. He tried to test his
solution to State-controlled banking: namely, private currency,
the right of every individual to issue his or her own money to
anyone who was willing to take it. He believed that the issuance
of private currency would destroy the perceived injustice of
"interest."

To test this theory, Warren opened a retail
store called a Time Store from which he issued Labor Dollars. In
1827, the store opened with $300 worth of groceries and dry
goods that were offered at 7% mark-up from his cost in order to
cover "contingent expenses." Where he made his profit was in
selling his labor to customers by requiring them to pay for the
time it took him to effect the transfer of goods -- that time
consisted of the initial purchasing of the good and, then, its
sale. Remember, this was before groceries were pre-packaged,
pre-weighed and at a time when it was customary to bargain with
the shopkeeper rather than merely to pay a posted price.

In fact, one of Warren's innovations was to post prices
for goods. The customer would then pay the price of the goods in
traditional money and, then, compensate Warren for his time with
a Labor Note that promised to give back to him an equivalent
amount time in the buyer's occupation. If the buyer were a
plumber, for example, the Labor Note committed him to render his
services to Warren for "X" time units of plumbing work.

Warren's goal was to divorce the price of the goods from
the compensation he received -- in other words, to establish an
economy in which his profit was based on the exchange of time
and labor. And, to some degree, he succeeded. A thriving barter
community arose and spread outside the radical community, with
regular people coming from a hundred miles away to avail
themselves of Warren's low prices. Having succeeded, however, he
closed the store because its entire purpose had been to test the
theory.

Warren was far from alone--even at that early
date--in stressing the need for private currency. In 1843--which
is roughly the same period--Lysander Spooner wrote a tract
entitled "Constitutional Law Relative to Credit, Currency and
Banking". He stated, "To issue bills of credit, that is
promissory notes, is a natural right...The right of banking...is
as much a natural right as that of manufacturing cotton."

It is undeniably true that the individualist anarchists
accepted a labor theory of value. This meant that they rejected
profit from capital in three forms in particular: interest on
money, rent, and profit in exchange, all of which was called
"usury." If their main political goal can be stated as "the
abolition of the State," then it is no exaggeration to say that
their main economic goal was "the abolition of the money
monopoly." And by this term -- "money monopoly" -- they referred
to three different but inter-related forms of monopoly: banking,
interest, and the issuance of currency.

I want to focus
entirely (as I have been) on the issuance of currency, which I
think provides a good sense of how individualist anarchist
approached all issues of "usury." Some individualist anarchists,
like Benjamin Tucker, considered the right to issue private
currency to be so important that he believed it alone could
bring about the destruction of the State. The money monopoly was
considered to be the means by which the banks sustained
themselves and robbed the average man of economic opportunities.
Through the act of incorporating, bankers became immune from
personal obligations: they acquired the legal advantage of being
able to contract while avoiding the responsibility for doing so.
This was not only a money raking scam that bankers ran on the
public, it also denied credit to the working people by setting
up prohibitive interest rates or criteria for acquiring
credit.

The alternative banking system that Tucker
embraced was what William B. Greene called "mutual money", what
Spooner referred to--in his tract "A New System of Paper
Currency"-- as "the invested dollar" and what the French
socialist anarchist Pierre Proudhon called "the Bank of the
People." By these terms, they all referred to a currency that
ordinary people could issue which would be secured by their own
property. For consistency, I'll call it "mutual money." Spooner
described it as follows, "The currency here proposed is not in
the nature of a credit currency...it constitutes simply of bona
fide certificates of Stock, which the owners have the same right
to sell that they have to sell any other Stocks."

To
rephrase this...When Spooner spoke of an "invested dollar" or
"mutual money" rather than a "specie dollar," he meant currency
that was backed by "property of a fixed and permanent nature"
such as a house rather than currency that was backed by gold or
silver. He meant money that was based on a form of debt that
functioned like a mortgage.

And this mutual money was
crucial to the empowerment of the worker. In "Poverty: Its
Illegal causes and Legal Cure," Spooner argued that men
deserve the full fruits of their labor and the most likely way
this would happen was for each man to become a self-employer.
But to become a self-employer, most people needed access to
credit on their own capital, on anything they were able to
mortgage -- they needed credit that banks routinely denied
through monopoly.

The key question at that point becomes:
what if the issuer of private currency decides to charge
interest on its use? Would that practice be forcibly prohibited?
The answer to this question is what separated advocates of the
labor theory of value who were socialists from those who were
libertarian. The socialists would have banned such practices.
The individualist anarchists answered, If a lender can find
someone foolish enough to voluntarily enter into such a
contract, then the contracting parties must be left to their
folly. The right of contract -- "society by contract" -- was the
higher law. The only remedies individualist anarchists would
have pursued against those who charged or paid interest were:
education; and the establishment of parallel banks and
currencies that offered what they believed to be a better deal.
Individualist anarchists gave primacy to the free market and the
right of contract...this is what made them libertarians rather
than socialists.

One of the most tragic events in
libertarian history was the destruction of Tucker's offices
through fire which led to the demise of Liberty in 1908. And an
important dimension of the tragedy was that debate on economics
was just beginning to reopen in the pages of Liberty between the
American anarchists and a group known as the British
Individualists.

The British Individualists were the
English counterpart to the Tucker circle in America, and they
were -- generally speaking -- worse on political theory but
better on economics. Among the best voices on economics -- in my
opinion -- was J. Greevz Fisher. In a debate that erupted in
1891, he pointed out that a mutual banking system existed
already to some degree in that people with were free to issue
promissory notes to deliver commodities such as cotton or wheat,
yet the Bank of England [the country from which he argued] had
not collapsed. Moreover, he stated, "Schemes to bring about the
abolition of interest, especially when the authors promulgate
this as a necessary consequence of free trade in banking are
pernicious.... What is called free trade in banking actually
means only unlimited liberty to create debt. It is the erroneous
labeling of debt as money which begets most of the fallacies of
the currency faddists."

In a second debate that occurred
in 1893, Fisher neatly summed up the problem with the
individualist anarchist position, "Mr. Bilgram [the person
against whom he was arguing] appears to take no notice of the
argument that the rate of interest upon loans...[would still
exist] under a system of barter.... Interest is the hire of
commodities separated from their owner and entrusted to another
person. The time of separation is a privation to one party...and
a benefit to the other party."

If the discussions were to
have continued, it is likely that the American anarchists would
have moved more toward an Austrian view of interest and capital,
just as the British individualists moved toward anarchism. With
such a synthesis, modern libertarianism might have been emerged
decades before it did. In conclusion, as far as I can see,
whatever economic differences exist between the 19th century
tradition and the current one are differences without practical
consequences.

Again, with reference to the money
monopoly, I'll leave it to Murray Rothbard to explain what I
mean, "Suppose, for example, that I decided to print paper
tickets called 'two Rothbards,' 'ten Rothbards,' etc., and then
tried to use these tickets as money, In the libertarian society
I would have the perfect right and freedom to do so. But the
question is: who would take the tickets as 'money'? Money
depends on general acceptance, and general acceptance of a
medium of exchange can begin only with commodities, such as gold
and silver."

Rothbard summed up what he believed would be
the impact of mutual money, "...the anarchist society
would...lead to much 'harder' money than we have now. Without
the State to create the conditions and coercions for continued
inflation, attempts at inflation and credit expansion could not
succeed on the free market."

As long as the default
position of individualist anarchism was the primacy of
contracts--and it always was--then the free market would have
inexorably established interest and hard currency. And that is
what I mean by saying their theories were a difference with no
practical significance.

To restate this:
First...individualist anarchists would have allowed such
practices as interests to occur between consenting parties;
Second...without imposed restrictions, such practices would have
occurred. Indeed, they would have flourished; Third, and more
speculatively, the practical bent of individualist anarchists
that made them test their social theories would have led them
ultimately to question and--perhaps--reject "the labor theory of
value" when they were confronted with realities that disproved
it. Or when confronted a few more times by indignant British
individualists who out argued them on economics. But this latter
point is mere speculation.

So what is my final word on
the importance of individualist anarchism? To quote Murray
again, "by the mid-nineteenth century, the libertarian
individualist doctrine had reached the point where its most
advanced thinkers in their varying ways had begun to realize
that the State was incompatible with liberty or morality. But
they went only so far as to assert the right of the lone
individual to opt out of the State's network...Spooner and
Tucker advanced libertarian individualism from a protest against
existing evils to pointing the way to an ideal society toward
which we can move."

American individualist anarchism went
beyond a personal ideology or one that merely protested the
State; it provided a blueprint for social freedom.